New Restructuring

Deutsche Bank Plans €8-Billion Capital Hike

FILE PHOTO – The headquarters of Germany’s Deutsche Bank is photographed early evening in Frankfurt
CEO John Cryan is preparing bold measures to strengthen the bank, headquartered in Frankfurt. Source: Reuters

Germany’s largest bank will sell €8 billion in shares through a rights issue and restructure its operations, including a public listing of its asset management business and the sale of dozens of billions of loans.

It had already announced this intention on Friday evening, but it gave confirmation and more details on Sunday.

The capital hike, which is underwritten by eight U.S. and European banks, represents almost a third of Deutsche Bank’s market value on Friday, when it had a capitalization of €26.7 billion.

The Frankfurt-based bank is burdened by investment banking missteps dating back to the last decade and billions of euros in settlements and fines. The bank said it now plans to keep its retail subsidiary Postbank — instead of divesting it — and to sell a minority stake in Deutsche Asset Management through an initial public offering in the coming 24 months.

The bank will also divest or run to maturity a €60-billion portfolio of outstanding loans in its investment banking unit, Global Markets, and sell another €30 billion worth of credit.

“Severance and restructuring costs resulting from the planned measures are estimated to be approximately €2 billion over the period 2017-2021 with approximately 70 percent to be incurred over the next two years,” the bank said.

Deutsche Bank also announced a new set of financial targets, which will replace those of October 2015. It did not say whether the reorganization will result in job losses.

Gilbert Kreijger is an editor with Handelsblatt Global in Berlin, covering companies and markets. Read more in Monday’s issue. To contact the author:

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